What You Should Know About Physical Inventory Count

Inventory management is an important part of any retail business. It helps them monitor the stock levels accurately and efficiently. A term that is often mentioned in this aspect is physical inventory count. In this post, we will provide what you need to know about it, including its definition, different categorizations and their importance.

What is a physical inventory count?

physical inventory count

In brief, a physical inventory count is an organized way to count a company’s stock in which employees count the products using a specified procedure. At the end of each reporting period, companies often conduct a physical inventory count.

4 types of physical inventory count

Now that you know what a physical inventory count is, here are the 4 types and their corresponding pros and cons.

Manual completion

Manual completion is the method with which employees use paper count cards or sheets with pencils to record stock levels. This method requires little budget as there is no need for extra materials or devices. However, as it is done manually, there is a higher chance of errors. Businesses may risk having an inaccurate number of products.

physical inventory count manual completion

Electronic counting

Scanners, RFID, barcodes, and mobile devices are needed for electronic counting. Retailers can reduce counting mistakes considerably with this strategy. Instead of arranging days to manually finish the physical count, businesses that use an electronic inventory system can accomplish it in a matter of hours with the help of technologies. In exchange, this procedure may demand additional time to set up devices and costs.

Cycle counting

At any given time, employees count random pieces or rotate sections of the inventory, which is known as cycle counting. Cycle counting is a more systematic and usually automated way of counting sections of stock. It saves time, removes the majority of human error, and provides real-time, relevant insight.

Full inventory

When corporations repurpose or hire temporary staff to count all of the goods at once, this is known as full inventory. This approach generates reliable inventory data that may be used to create the annual financial statement. However, it may need a downtime of operations and is labor- and time-intensive.

physical inventory count full

Why do businesses need physical inventory count?

Physical inventory counts are an important aspect of maintaining accurate and up-to-date inventory data. Real-time inventory data allows for more accurate sales and purchase forecasting, as well as ensuring that you always have the proper amount of stock on hand.

In addition, physical inventories are beneficial to your consumers as well. Updated inventory levels guarantee that you can swiftly fulfill your clients’ requests or notify them when they can be fulfilled.

physical inventory count

Another advantage of physically counting your inventory is that you will be aware of and be able to plan for loss. Theft or breakage might result in a loss. In this way, physical inventory count can boost your profitability in the long run. You may also mark specific things in your warehouse as outdated inventory, which is a useful way to figure out which ones should be moved to a quick sale.


In a nutshell, businesses should conduct physical inventory count frequently to maintain the best performance. To assist the process, many companies nowadays are using a point of sale system with real-time synchronization and powerful inventory management tools. If you are looking for a system like this, let us introduce you to ConnectPOS. Don’t hesitate to contact us if you have any questions.

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